With a huge increase in remote work, more employees than ever are working from home offices rather than commuting. If you work from home, you might be able to make tax-deductible upgrades for your home office.
How Do I Qualify?
Both homeowners and renters can claim tax-deductible home office expenses. To qualify, the space needs to meet IRS “regular and exclusive” use requirements. For example, if you’re using your kitchen as an office, you likely won’t qualify because you’re not using it exclusively for work.
Similarly, the IRS says that your home office should be your principal place of business. Yes, you can meet clients in coffee shops from time to time, but your home office should be where you do the bulk of your work. If you make upgrades that apply to the rest of the house as well, you can deduct the percentage of the cost that is equal to the size of your office space relative to your home.
If you’re looking to maximize your savings while working remotely, here are some of the tax-deductible upgrades you might want to consider for your home office.
1. Install a New Security System
When you’re working from home, it is essential to keep your valuable equipment safe. For these reasons, a quality home security system is a necessity. Consider your current security and look at what areas are vulnerable. You may want to consider interior locks on your office doors, or security cameras or motion sensors around the perimeter of your home that send notifications to your phone.
2. Put in New Office Shelving
For many transitioning to a home office, you may find that your home space lacks the physical storage that your office did. You need bookshelves, cabinets, and storage shelves that allow you to keep important information at hand and file away paperwork where you can find it later. Consider whether you want to have a freestanding storage solution or hire professionals to install built-in shelving for you.
3. Upgrade to a New Water Heater
Like commercial offices, home offices need a regular supply of hot water to function adequately. IRS ruling states that you’re allowed to deduct the portion of the expense of a new water heater that is equal to the size of your office in your home. If you already need or could use a water heater upgrade, this discount could be a great way to save you money from making the purchase.
When making upgrade decisions, consult the professionals. A qualified water heater company can advise you on which type of water heater is best for your space and will save you money. This water heater company in Santa Paula recommends looking into tankless water heaters, which are energy efficient and can help you save on your utilities bills as well.
4. Install a New Air Conditioner
Air conditioning units are essential for anyone working in a hot space. Even keeping the air circulating can make a big difference when spending hours in a stuffy space. There are a range of options available. If a window air conditioning unit is installed directly in your designated office space, it is considered an office expense that is entirely deductible.
5. Set up New Home Office Lighting
Improvements in lighting can make a big difference in any space. Better office lighting not only helps you focus better, but it can make a big difference on remote calls. The more thoroughly you can illuminate a space, the clearer you’ll look on Zoom. If your office lacks access to daylight, you might want to consider installing natural light-emitting bulbs.
6. Soundproof the Room Space
Finally, you need to concentrate while you work – and that means being free from interruptions. Tax-deductible soundproofing technologies such as thick rugs, noise blocking curtains, and upgraded window inserts can help.
Overall, tax-deductible upgrades are a massive benefit for people working from home offices, especially during coronavirus. If you want to make a home office tax deduction, be sure to hold onto your receipts to make tax season easier. A few upgrades now can help to cut your income tax burden and provide you with the extra income you need to see you through these challenging times.